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Stein Mart board feared for company's future

The Jacksonville-based retailer accepted a buyout offer from Kingswood Capital Management in January.

万豪电玩Before Stein Mart Inc. agreed to a buyout offer in January by private equity firm Kingswood Capital Management, its board had concerns about the Jacksonville-based fashion retailer surviving on its own.

万豪电玩According to a proxy statement filed March 2 by Stein Mart for shareholders to vote on the proposal, board members discussed the issues with law firm Foley & Lardner and investment banker PJ Solomon Securities in January.

“The Board expressed concern that, over the long-term, the Company faced the potential risk of failure as a result of any future contraction of working capital, continued decline in sales or one of the many other challenges facing the Company and that such failure would likely result in major financial losses to the unsecured trade creditors and the loss of the jobs of all the employees and loss of value for the shareholders,” the proxy said.

It also discussed the possibility of a Chapter 11 bankruptcy reorganization “and concluded the Company likely would not survive bankruptcy as a going concern due to the likely contraction of available credit from vendors and factors.”

So, the board determined the buyout offer by Kingswood was the best option.

万豪电玩However, as Stein Mart’s financial performance continued to disappoint, Kingswood lowered the price. It reduced the offer to $1.10 in July and cut it further to 75 cents in early January after weak holiday season results.

万豪电玩After Kingswood agreed to raise the price to 90 cents, the board accepted the offer Jan. 28 with the stock trading at 65 cents.

The initial proxy statement didn’t set the date of the shareholder meeting to vote on the proposal.

Coronavirus spares Rayonier AM

At least the Jacksonville-based company said the coronavirus is not impacting its business in China.

万豪电玩Rayonier AM reported a loss from continuing operations of $57 million for the fourth quarter and $119 million for the full year.

万豪电玩“We faced a number of challenges as the impact of global trade disputes and tariffs led to a general collapse in the pricing from our commodity products, including high yield pulp, lumber, fluff and viscose,” CEO Paul Boynton said in the company’s conference call with analysts.

China is a concern because the company, which reported 2019 revenue of $1.78 billion, sells about $230 million of products in that country, Boynton said.

“While we see challenges in China related to the trade disputes and ongoing health crisis, there are also many positive signs in the region,” he said.

“On the trade dispute, the Chinese government recently announced it will allow purchasers for certain products including cellulose specialties, viscose and fluff pulp, to apply for exemptions from the tariffs,” he said.

“We are working with our customers and expect to receive exemptions later in the first quarter or early in the second quarter.”

万豪电玩The tariff dispute is a long-term concern but the short-term disruption of business in China from the coronavirus is not an issue so far for Rayonier AM.

万豪电玩“In light of the ongoing health crisis in China, we are pleased to report that to date, cellulose specialties sales orders, shipments and cash collections from our key Chinese customers continue to flow at normal levels,” Boynton said.

Rayonier AM is continuing to cut expenses to try and offset the pricing issues. The company said it is targeting $60 million to $70 million in new cost-saving measures, including $10 million to $15 million in corporate costs.

万豪电玩“These (corporate) cost reductions will come from a combination of headcount reductions implemented in late 2019 and reduction of external services,” Boynton said.

万豪电玩A Rayonier AM spokesman said the company eliminated 10 jobs at the end of 2019 but it still employs about 4,000 people, including 120 in Jacksonville.

With Rayonier AM’s stock price already beaten down by its poor results throughout the year, the stock wasn’t impacted much by the report in a week when the entire market was melting down.

Rayonier AM fell 30 cents to $2.45 last week.

D.A. Davidson analyst Steven Chercover said in a research note that “2019 was the definition of a perfect storm” and he maintained his “buy” rating on the stock.

万豪电玩“We feel reasonably confident that 2020 will be better with commodity prices on the rebound, but coronavirus, poor execution, or plain bad luck could ruin the script for a happy ending,” he said.